DeepBook launched on Sui last year as a native liquidity layer, serving as a launchpad for DeFi protocols. But its potential goes far beyond what we've seen so far, with use cases including perpetual futures, lending, and payments all possible in the near future.

Built as a permissionless central limit order book, DeepBook works as a neutral trading floor with a set of built-in mechanisms to enable DeFi on Sui. Protocols such as Cetus, Aftermath, Kriya, FlowX, and Hop Aggregator include DeepBook among their liquidity sources, creating vibrant markets for DeFi users.

Protocols find DeepBook's features and performance very compelling. Aftermath noted that its combination of transaction speed and reduced processing time enables a fully onchain trading environment rivaling centralized exchanges in terms of liquidity and user experience. 

Currently, DeepBook supports both market and limit orders. However, its fundamental structure lets it support far more advanced features. With further development, protocols using DeepBook can anticipate a wealth of new capability for their customers.

Perps

Perpetual futures, or perps, are currently offered by a number of Sui DeFi protocols, and have proven a popular trading mechanism. Building support for perps into DeepBook would require extending it to support assets other than SUI. As all assets on Sui, including SUI, are objects, this extension would be very feasible.

In a perp, a user enters into a contract to buy or sell an asset at a specified price sometime in the future. There is no expiration date on the contract, although the user needs to pay a funding rate to keep the contract alive. The advantage of a perp for the user is that they retain their capital until they decide to execute the contract, and they can wait until their preferred market conditions before executing. 

Perps on DeepBook would let the user, through a DeFi protocol, set the price they are willing to pay. Instead of a second party agreeing to the terms, as in a simple trade, DeepBook would need to hold the unfunded contract until the user who set it up decides to execute it.

Lending

Sui and other blockchains let asset holders easily engage in permissionless lending and borrowing, with far fewer hurdles than in traditional financial markets. DeepBook's ability to maintain and trade liquidity can be engineered to support a lending mechanism.

Current lending protocols on Sui let users offer up their assets to others at an interest rate. This type of DeFi activity is popular because it gives asset owners an easy way to garner yields. Of course, unlike some other DeFi mechanisms, the loaner loses access to those assets until the loan is repaid. 

Support for lending on DeepBook would let DeFi protocols aggregate user assets into a pool and make it available to borrowers through DeepBook. Users on the same or other DeFi protocols looking to borrow assets could access that pool, repaying the loan with interest at the end of the loan term.

Sui Bridge integration

The recent launch of Sui Bridge, a new native bridge on Sui, makes it easy, quick, and inexpensive to move assets between Sui and Ethereum blockchains. Integrating Sui Bridge with DeepBook would be a logical extension to its liquidity.

Moving assets from one blockchain to another is a common practice, and bridges are a primary means of supporting these moves. Sui Bridge, slated to launch on Mainnet by the end of the year, converts SUI to ETH when moved from Sui to an Ethereum blockchain, and ETH to SUI when moving assets to Sui. 

Although the asset movement supported by Sui Bridge is not a DeFi activity in itself, integration with DeepBook would make it easier for users to access capital on another blockchain for use in a Sui DeFi protocol. A process that currently involves multiple parties could be compressed down to the user and the DeFi protocol using DeepBook.

Cross-chain aggregation

Similar to the potential of integrating Sui Bridge with DeepBook, cross-chain aggregation could also extend liquidity across other blockchains. Instead of moving tokens from one chain to another, cross-chain aggregation would require a mechanism where DeepBook could access liquidity pools on other blockchains.

Various DeFi protocols specialize in aggregation within the Sui ecosystem, using routers to find the best swap rates among various liquidity sources, including DeepBook. Aggregators help users get the best available swap rates. 

Letting DeepBook access a significant amount of liquidity from other pools would greatly increase the ability for protocols to find the best swap rates. Users would find particular benefit in swapping native tokens. 

Payments

A really potent use case would see DeepBook powering a payment platform dealing in fiat currency. This scenario would likely require a financial partner with significant currency to back up payments.

To some extent, users can make fiat currency payments over Sui, but it requires onramps and offramps, and a number of steps. But given that a path exists, it can be programmatized, and using DeepBook as the basis would make sense due to its existing liquidity and efficiency.

A payments platform built on DeepBook would excel when it came to fiat currency exchange, as SUI or a bespoke digital asset could be the intermediary between different global fiat currencies. 

Focus on the future

As a liquidity layer serving any DeFi protocol on Sui that cares to use it, DeepBook offers powerful trading functionality, mirroring that offered in traditional financial markets. And DeFi protocols have leveraged DeepBook while offering their own trading mechanisms, such as lending and perps.

Integrating these features into DeepBook will make them more efficient, potentially serving end users at even better rates. Protocols can leverage these features alongside their own mechanisms and liquidity pools, continuing to give their customers the best experience. 

Note: This content is for general educational and informational purposes only and should not be construed or relied upon as an endorsement or recommendation to buy, sell, or hold any asset, investment or financial product and does not constitute financial, legal, or tax advice.